Reflecting policies throughout the 1980s and 1990s, prisons hold a disproportionate number of society's drug abusers. Between 1980 and 1999, drug arrests nearly tripled, and the rate of growth in states'drug offender population was approximately 50 times greater than the growth rate of the general U.S. population (BJS, 2001). A high proportion of inmates use illicit drugs;69% of state prison inmates report regular drug use the month before entering prison (Belenko, 2002). Treating this drug use is important from a societal perspective because inmates who regularly use drugs have higher criminal recidivism rates than other inmates (Belenko, 2002). However, at most, 10% of state inmates report receiving any clinically or medically based drug treatment since admission (Belenko and Peugh, 2005). Given the high and rising cost of incarceration (BJS, 2005), the high cost of crimes committed, and the relatively modest cost of prison-based treatment, investing in effective and targeted treatment that can reduce incarceration may make economic sense. Although the existing literature on the benefits and costs of prison-based drug abuse treatment has greatly informed research and policy in this area, the results are limited because the studies consider drug abuse as an acute problem that can be addressed in one treatment episode. However, from the perspective of "treatment careers" and the model of addiction as a chronic disease, drug abusers are likely to engage in multiple episodes of treatment over the course of their lives. In addition, given the strong relationship between drug abuse and criminal activity, inmates who abuse drugs are likely to have multiple episodes of incarceration. Thus, comprehensive analysis of the benefits and costs of prison-based drug treatment requires long follow-up periods as the benefits of treatment may increase over a long horizon. Because no data set follows drug-abusing inmates over the course of their remaining lifetimes and collecting such data is unlikely, the lifetime perspective can only be captured through the use of mathematical models, such as simulation models. As no model has captured the lifetime dynamics of drug abuse, drug treatment, and incarceration, the specific aims of this study are to (1) develop a dynamic simulation model of drug abuse, treatment, and incarceration for a state prison inmate cohort;(2) use the model to estimate the lifetime benefits and costs of prison-based drug treatment for a state prison inmate cohort;and (3) use the model to estimate the effect of alternative prison-based drug treatment scenarios on lifetime benefits and costs of prison-based drug treatment. The proposed dynamic simulation model expands on a model that we have previously implemented (Zarkin et al., 2005a). Results will help policy makers make better judgments about the allocation of funding to prison-based drug treatment resources.